Recession widens gap between strong and weak regions, report finds

Cities with high unemployment have lost the most jobs in the recession, a thinktank reports. Photograph: Phil Noble/REUTERS

Recession has bitten hardest in cities already ravaged by long-term industrial decline, exacerbating the divide between Britain's strongest and weakest regions, according to a thinktank report published today.

In its annual snapshot of the health of urban Britain, the Centre for Cities says places such as Hull, Doncaster and Birmingham, which already had higher than average unemployment before the credit crunch, have suffered the heaviest job losses over the past 12 months.

"Many of the cities that have been hit hardest are places still suffering from the legacy of industrial restructuring and previous recessions. This is widening the gap between cities," it says.

The difference between the strongest and weakest 10 cities, measured by the number of people claiming jobseeker's allowance, has increased by 70% since the downturn began.

In Hull, which has suffered the largest increase in joblessness since the downturn began, more than 6,000 people have been added to the unemployment register and there are now an estimated 16 jobseekers for every vacancy. In Cambridge, the least-affected city, the recession has added just 705 people to the unemployment total.

Official figures next week are expected to confirm that the UK climbed out of recession in the last quarter of 2009; but in its Cities Outlook, launched today in London at a seminar chaired by the Liberal Democrats' Treasury spokesman, Vince Cable, the Centre for Cities warns that long after the slump is officially over, many areas will continue to struggle.

"Party leaders need to wake up to the reality that some cities will still feel in the middle of a recession until well after the election," said the centre's director, Dermot Finch. "The next government needs to help these struggling cities fix the basics – like improving schools and public transport – so they can attract new business and jobs."

Cities that are heavily dependent on public sector jobs, and have seen little private sector employment growth over the past decade, such as Burnley, Barnsley and Newport, will be especially vulnerable when the public spending squeeze bites in the years ahead.

The areas that should thrive, by contrast, are those with what Finch calls fixed assets: a high skills base, good transport links, a location close to other prosperous urban areas, and so on. The report identifies Brighton, Milton Keynes and Reading as "cities to watch".

Brighton has seen 20,000 private sector jobs created over the past 10 years, for example, and more than one-third of its workforce has a graduate-level qualification.

Adam Lent, head of economic and social affairs at the TUC, said the report's findings showed that any new government should intervene more actively to support jobs and investment in cities that will otherwise be left even further behind.

"This is where a pro-active industrial policy really comes into its own. The reason these places have been devastated for so long is that we have had this Treasury neutrality – we don't care how the economy grows."

Finch warned that politicians must beware of believing they can create jobs, by investing in high-profile regeneration projects or trying to attract new industrial sectors from scratch. Instead, with money tight, they should focus on fostering the right climate for private sector job creation – by smaller scale projects to improve transport links, reclaim land, or boost local skills, for example.

"The key issue is private sector jobs growth, made even more important by the pulling back of public spending that's on the way," he said.

Indeed, the thinktank urges some struggling areas to scale back their ambitions, and instead of trying to bring in thousands of new jobs, take advantage of their proximity to more successful neighbours.

"Rather than undertake poorly targeted investments to promote innovation and high-value sectors, residents of cities in this position, such as Rochdale or Barnsley, may be better served by attracting businesses that can generate jobs for the local population, and connecting to higher-value economic opportunities in nearby economic growth centres, like Manchester and Leeds."

When it comes to driving the economy of the UK as a whole, however, the Centre for Cities says that because of their sheer size, it is the "big hitters" that will make the difference to whether there is a strong and sustainable recovery, or a "double dip" downturn in 2010. More than one in three jobs in England are based in five city economies — London, Greater Manchester, Birmingham, Leeds and Merseyside.